Russia stealing Western technology and weapon components - What can halt import schemes

Russia, through various trade schemes involving third countries, literally steals Western technologies necessary for weapon production. This is happening despite Russia's constant claims, since the beginning of the full-scale invasion of Ukraine, that it is fighting against the collective West rather than the Ukrainian people. Meanwhile, in the missiles, shells, and bombs that Russian forces use to bombard peaceful cities, Western components are regularly found.

In Ukraine, every microchip and foreign-made chip is recorded. The list of discovered parts produced by European and American companies is shown to international partners, demanding that they change this situation.

Not made in Russia

A truck with a route from the Netherlands to Kazakhstan entered Russian territory. Customs control took a long time, border guards spent several hours checking documents for the import of technology, especially carefully inspecting boxes with Chinese drones purchased by a Kazakhstan company in Barendrecht. The driver reached Saratov after another 15 hours. About a hundred kilometers from the border with Kazakhstan, the truck was stopped. Chinese drones never made it to their final destination.

This is an approximate scheme that is often used. Instead of a Northern European country, it could be a Central Asian one, and instead of drones, American microchips or transistors. Everything that is impossible to "import substitute" in Russia, meaning copying someone else's technology and calling it your own.

Despite constant criticism, ridicule, and threats to the collective West, "Anglo-Saxons," and Americans separately, Russia has still not been able to create its own electronics needed for rockets, UAVs, tanks, and artillery. In fact, for everything that the Russian army is currently using in combat.

The only type of Russian weaponry without imported electronics is the AK-47 rifle, as stated by the head of the Center for Research of Trophy and Prospective Weapons, Alexander Zaruba.

"If there is any electronics somewhere, it always has foreign components. Because purely Russian-made items are a relatively short list. We find high-performance chips and programmable logic integrated circuits. They are irreplaceable. there is not any drone, including their Lancets, where there are no foreign components," he says.

Components in Iranian drones (Photo: Vitalii Nosach/RBC-Ukraine)

Over the past year and a half of the war, thousands of foreign components have been found in Russian military equipment, of which 1,057 have already been analyzed, according to Andriy Yermak, the head of the Presidential Office. These include various types of microchips, microprocessors, microcontrollers, as well as transistors, video and audio recording equipment, and navigation electronics. Western components are found everywhere. In just one X-101 missile that hit Lviv on August 15, 30 imported components were discovered.

American companies are the "leaders" in supplying their components to Moscow. They are followed by manufacturers from Japan, Germany, Switzerland, Taiwan, the Netherlands, and China. U.S. companies have a significant lead - of the 1,057 components analyzed, over 700 belong to them. Among the global corporations whose products are still found in Russian missiles and drones, for example, is Intel. Russia also receives a significant portion of its electronics from Analog Devices, Texas Instruments, and Microchip Technology.

An investigation into Iranian drone Shahed-136 showed identical results - mixing consoles, switches, transistors, and microchips found in these UAVs belong to American manufacturers. While China trades with Russia directly, the United States and European countries do not engage in trade relations with Moscow. However, their companies' products regularly appear in Russian technology, and in most cases, this cannot be called smuggling.

Window to Europe through Asia

There are several routes to obtain components while bypassing sanctions. Russia creates dummy companies in various countries, using them as intermediaries, conceals customs data, conducts fake transit operations, and resorts to standard re-export, as in the case of Kazakhstan.

One of the most popular supply routes for electronic components to Russia passes through Central Asia. In most American and European corporations, electronics manufacturing is located in Asia because labor is cheaper there. A hypothetical transistor manufactured by Intel in Malaysia is purchased by a dummy company in China. Thus, the component does not undergo export control in America and ends up in Russia from Malaysia via China, explains Olena Bilousova, a consultant on strategic projects at the KSE Institute.

"If a component was made in the USA, it will travel to another country, and somewhere at customs, it will undergo this control. If it was initially made in Central Asia, essentially, it won't physically undergo U.S. export control. Then this control falls on the shoulders of the company whose plant operates in that country," says Bilousova.

The purchasing firms can belong to Russians or citizens of other countries. They can be "clean" - meaning they have no discernible trade relations with Russia, or "gray." "Gray" companies are usually registered at a specific address but are in fact so-called "cloud offices" without a physical location. Essentially, they are involved in reselling goods to Russia.

Another method described above is fake transit, where goods are transported through Russia and left there. But for this scheme to work, the country that is officially receiving the electronics must turn a blind eye to the fact that it has ended up on Russian territory. This method usually works with some Collective Security Treaty Organization (CSTO) countries, including Belarus, Armenia, Kazakhstan, Kyrgyzstan, and Georgia.

Russian military in occupied Donetsk (Photo: Getty Images)

A large amount of electronics enters Russia through China. Beijing supplies Moscow with all the electronics it can make, including certain technology. For example, in 2023, Russia received 30 times more drones from the DJI company than Ukraine.

Many Western components found in Russian technology fall into the category of dual-use goods - items that can be used for both military and civilian purposes. It cannot be claimed that all components imported into Russia are just spare parts for washing machines. Most often, Moscow purchases high-tech systems that serve as the 'brains' of their devices.

"We see that the same companies sell them. Washing machine microchips certainly wouldn't meet the demand for high-tech components. Our priority is to block the path for components that Russia cannot replace," Bilousova added.

Russia also buys Western "smart technologies," such as means for securing casings. However, according to experts, restrictions on the supply of these items are not a priority. Russia, if it wishes, can manufacture them itself, so it is more important to limit Russia's access to components that it cannot independently produce.

"If we completely cut off the supply routes for these microchips, they won't be able to replace them with domestic products because they don't have such production capacities, it's impossible to make them quickly, and it's very expensive, so such productions are usually localized in only a few countries," Bilousova concluded.

General pressure

The avalanche of unprecedented Western sanctions that literally descended upon Russia over the past year and a half has failed to stem the flow of electronics into the aggressor country. Instead, it has only increased, despite the complex logistical chains that Russians have to negotiate with third countries and, in some cases, with the manufacturers themselves.

"We have analyzed 174 imported components taken from Shahed, Lancet, and Orlan drones. Our investigation found that after a sharp decline at the start of the full-scale invasion, trade volumes increased in the third quarter of 2022. Moderate growth continued thereafter. In terms of monetary equivalent, deliveries from January to May 2023 compared to the same period last year increased by 19%," says Andriy Yermak.

This applies not only to components for drones. If at the beginning of the full-scale invasion, the volume of sales of all electronic components to Russia declined, by the summer of 2023, exports had grown and now fluctuate at pre-war levels. Undoubtedly, some electronics have become more expensive, and every link in the supply chain from manufacturers to Russia demands a margin. However, the quantity of component supplies has not diminished.

Russian military personnel in occupied Mariupol (Photo: Getty Images)

A significant portion of the responsibility, of course, lies with the manufacturers themselves. From a reputational point of view, they have an interest in ensuring their products do not end up in Russia. When a microchip of American origin is found in a missile that struck a square in a Ukrainian city, questions arise for the company.

Foreign manufacturers, when provided with detailed statistics on components found in Russian equipment, often claim ignorance about how they ended up there. Whether this is true or not is hard to say. However, according to sources of RBC-Ukraine, companies have the means to at least reduce the volume of products being shipped to Russia.

Every company has its own system of control. At the very least, employees responsible for exporting products can expose schemes of shipments to Russia. There is a substantial number of aggregator databases that can be used to determine whether a purchasing company is a "gray" firm or has a physical address and ownership. With a detailed database from Ukrainian partners specifying which unit of equipment contains a particular component, it's possible to trace how it ended up in Russia.

Additionally, the production of goods that integrate with Russian systems can be stopped. A prime example is Russia's modern weaponry, which relies on the GLONASS system.

"It makes sense to stop producing chips that support GLONASS. For the world, this is not a very important function. If a company produces and sells components that support GLONASS, these are potentially companies that can support Russia, and we understand why companies add these features to their devices," says Olena Bilousova.

Financial sectors can also be involved in controlling the supply. All payments are made through banks, which have an interest in ensuring their clients do not violate sanctions policies. There are numerous structures worldwide that monitor money laundering. If Russia purchases goods through a front person, transactions can be traced, revealing a whole chain of "cloud offices" that should be avoided. However, this control mechanism won't work until the manufacturing companies themselves want it to.

"We cannot assume that all company leaders are truly responsible, that they are 'all for the good' and are concerned about Ukraine's fate, which they may not even be able to locate on a map. For them, this is the golden period - a rise in income. At such a moment, it is very difficult to determine the company's goals and strategy, how much they are driven by morality versus profits," adds Bilousova.

If companies themselves lack the motivation to minimize trade with Russia, the pressure needs to become more global. For instance, the European Union could completely ban the supply of certain types of products to Kazakhstan, according to Vladyslav Vlasiuk, Presidential Office's Sanctions Adviser and Secretary of the International Working Group on Russian Sanctions.

"They've already restricted a lot. But this applies to Russia. Here, you can restrict it to Kazakhstan and Armenia as well. This could work. It's so transparent when for years you've imported 100 units maximum per year, and suddenly, it's 1,000 units, and then another 500. Who are you fooling? It just needs to be banned," says Vlasiuk.

All of this does not mean that the sanctions imposed by the West on Russia are ineffective. The fact that Moscow has to create intricate supply chains for various goods already speaks to their effectiveness. The question is whether the countries implementing sanctions against terrorist states are using all possible tools of pressure. So far, it's clear that they are not. For example, Iran, which has been under American sanctions for over 42 years, somehow still manages to produce cheap but effective military equipment.

"The EU is trying to act carefully without violating anyone's interests. As they explained to us: 'To avoid pushing third countries into Russia's arms.' Sanctions or restrictions on certain categories of goods are considered to be violations of interests," adds Vlasiuk.

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In order for pressure from a specific point to turn into global pressure, resonance is necessary. If we announce to the world that the most famous fast-food restaurant continues to operate in Russia, society will react quickly and predictably. It's more complicated when it's not about what people buy every day. Microchips, transistors, and other electronic equipment definitely don't belong to this category. But Russian occupiers, by buying imported components, install them in a rocket that flies into a Ukrainian port and ends up in a ship with grain.

Russia today poses a threat to what is internationally referred to as the "global security architecture." It shouldn't be expected that the harshest sanctions and global pressure will push Russia back into the Stone Age. However, reducing the military-industrial complex of the aggressor country to the level of global outcasts, similar to North Korea, is definitely achievable.